G20 to maintain expansionary policy

G20 policymakers meeting in London next week will likely pledge to maintain accommodative policies for as long as is needed, a G7 source told Reuters on Thursday.

The source, who did not want to be identified, said language contained in the G20 leaders' communique in April on economic stimulus was not likely to change in any substantive way when finance ministers and central bankers make a new statement on Sept 5.

In April, the G20 said: Central banks have pledged to maintain expansionary policies for as long as needed and to use the full range of monetary policy instruments including unconventional instruments, consistent with price stability.

Similarly, the G20 would stick to its existing formulation on exit strategies, trying to assure markets that credible plans were in place but not indicating any imminent move to tighten.

Anything else would make people think something was about to happen, the source said.

While global imbalances remained a key issue as the world looked to future sources of growth given the U.S. consumer was unlikely to continue powering the world economy, the source did not expect much pressure on China to allow its currency to rise.

Currencies are only part of the story, the source said.

G7 countries, and notably the United States, have for years been calling on Beijing to let its yuan currency rise against the dollar but the stridency of such demands has died down as the significance of the G20, of which China is a member, has grown.

Nor is there likely to be a repeat of the discussion of the dollar's status as the world's reserve currency, the source said, an issue that was brought up by some emerging nations at previous meetings this year.